SHRI. RUSTOM J. GAGRAT, MUMBAI v. JOINT C.I.T.-11(3), MUMBAI

ITA 6518/MUM/2008 | 2005-2006
Pronouncement Date: 30-11-2011 | Result: Partly Allowed

Appeal Details

RSA Number 651819914 RSA 2008
Assessee PAN AAIPG0393A
Bench Mumbai
Appeal Number ITA 6518/MUM/2008
Duration Of Justice 3 year(s) 20 day(s)
Appellant SHRI. RUSTOM J. GAGRAT, MUMBAI
Respondent JOINT C.I.T.-11(3), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 30-11-2011
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted D
Tribunal Order Date 30-11-2011
Date Of Final Hearing 24-11-2011
Next Hearing Date 24-11-2011
Assessment Year 2005-2006
Appeal Filed On 10-11-2008
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH D MUMBAI BEFORE SHRI R.K. PANDA (ACCOUNTANT MEMBER) AND SHRI VIJAY PAL RAO (JUDICIAL MEMBER) ITA NO.4700/MUM/2008 ASSESSMENT YEAR : 2003-04 ITA NO.6518/MUM/2008 ASSESSMENT YEAR : 2005-06 SHRI RUSTOM J GAGRAT GAGRATS NIRMAL NARIMAN POINT MUMBAI-400 001. ..( APPELLANT ) P.A. NO. (AAIPG 0393 A) VS. ASSTT. COMMISSIONER OF INCOME TAX -11(3) AAYAKAR BHAVAN MUMBAI-400 020. ..( RESPONDENT ) APPELLANT BY : SHRI VIJAY MEHTA RESPONDENT BY : SHRI SHA NTAM BOSE DATE OF HEARING : 24.11.2011 DATE OF PRONOUNCEMENT : 30 TH NOVEMBER 2011 O R D E R PER VIJAY PAL RAO (JM). THESE APPEALS BY THE ASSESSEE ARE DIRECTED AGAINST TWO SEPA RATE ORDERS OF CIT(A) DATED 5.6.2008 AND 16.9.2008 FOR TH E ASSESSMENT ITA NO.4700 & 6518/M/08 A.Y:03-04 & 05-06 2 YEARS 2003-04 AND 2005-06 RESPECTIVELY. IN APPEAL NO.4700/MUM/2008 THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS :- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) ERRED IN CONFIRMING THE ACTION OF A.O. IN NOT ALLOWING THE EXPENDITURE CLAI MED UNDER THE HEAD PROFITS AND GAINS OF THE BUSINESS O R PROFESSION AS PER THE COMPUTATION OF TOTAL INCOME AT RS.4 18 369/-. THE APPELLANT PRAYS THAT THE SAID EXPENSES CLAIMED OF RS.4 18 369/- MAY PLEASE BE ALLOWED. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD. CIT(A) ERRED IN CONFIR MING THE ACTION OF A.O. IN INITIATING PENALTY UNDER SEC TION 271B OF THE INCOME TAX ACT. THE APPELLANT PRAYS THAT TH E A.O. MAY PLEASE BE DIRECTED TO DROP THE PENALTY PROCEEDI NGS AS THE APPELLANT IS NOT REQUIRED TO ENCLOSE AUDIT R EPORT ALONG WITH THE RETURN OF INCOME. 2. GROUND NO.1 IS REGARDING DISALLOWANCE OF EXPENDITUR E. THIS GROUND IS COMMON IN BOTH APPEALS. THE ASSESSEE IS AN ADVOCA TE AND PARTNER IN THE FIRM M/S. GAGRAT & CO. THE ASSESSEE HAS INCOME BY WAY OF REMUNERATION INTEREST ON CAPITAL FROM THE SAID FIRM AND INCOME FROM OTHER SOURCES. APART FROM THIS ASSESSEE IS ALSO RECEIV ING THE SHARES IN THE PROFITS OF THE PARTNERSHIP FIRM WHICH IS EX EMPT. AGAINST THE REMUNERATION INCOME THE ASSESSEE CLAIMED DEDUCTION OF RS. 4 18 370/- BEING EXPENDITURE FOR EARNING THE SAID IN COME. THE DETAILS OF THE SAID EXPENDITURE AS GIVEN BY THE CIT(A) OF THE IMPUGNED ORDER IS AS UNDER:- ITA NO.4700 & 6518/M/08 A.Y:03-04 & 05-06 3 EXPENSES CONSIDERED FOR BUSINESS PURPOSE AND CLAIMED AND NOT ALLOWED PROFESSIONAL TAX 2 500.00 MOTOR CAR EXPENSES 12 961.20 MOTOR CAR INSURANCE 18 717.60 TELEPHONE 68 333.52 BOOKS 32 390.37 HOSPITALITY 25 534.26 BLACK COAT AND PANT 599.00 REPAIRS TO CHAMBERS 78 048.00 ELECTRICITY 34 254.00 RENT & SECURITY 41 250.00 DEPRECIATION 1 03 782.00 TOTAL 4 18 369.95 2.1 THE AO OBSERVED AS PER PROVISIONS OF SECTION 44AB OF THE INCOME TAX ACT AN AUDIT REPORT IS COMPULSORY WHICH SPECIFI ES THE PURPOSE OF EXPENSES INCURRED. SINCE ASSESSEE HAS NOT FILED THE AUDIT REPORT THEREFORE IT IS VERY DIFFICULT TO CONSIDER THE ASSESSEES CLAIM FOR VARIOUS EXPENSES AS DEDUCTION AND ITS AUTHENTICITY. ACCO RDINGLY THE AO DISALLOWED THE CLAIM OF THE EXPENDITURE. ON APPEA L CIT(A) CONFIRMED THE ACTION OF THE AO ON THE GROUND THAT THE EXPENSES ARE PERSONAL IN NATURE. FOR THE ASSESSMENT YEAR 2005-06 THE AO THOUGH ACCEPTED CLAIM OF EXPENDITURE AS FOR EARNING THE INCOME HOWEVER HE HAS DIVIDED THE CLAIM IN PROPORTIONATE TO THE SHARE OF PROFIT OF THE FIRM AND REMUNERATION RECEIVED BY THE ASSESSEE. 3. BEFORE US THE LD. A.R FOR THE ASSESSEE HAS SUBMITTED TH AT SINCE THE ASSESSEE IS AN ADVOCATE AND THE REMUNERATION RECEIVED FROM THE ITA NO.4700 & 6518/M/08 A.Y:03-04 & 05-06 4 FIRM IS FOR HIS PROFESSIONAL WORK AND BEING A WORKING P ARTNER WHEREAS THE SHARES IN THE PROFIT OF THE FIRM HAS BEEN RECEIVED BY THE ASSESSEE IN THE CAPACITY OF A PARTNER THAT HAS NOTHING TO DO W ITH THE PROFESSIONAL WORK OF THE ASSESSEE THEREFORE THE CLAIM OF THE EXPENDITURE IS ALLOWABLE FOR EARNING THE REMUNERATI ON INCOME AS THE SAME IS RELATED TO THE REMUNERATION INCOME. HE HAS REFE RRED TO THE COMPUTATION OF THE TOTAL INCOME OF THE ASSESSEE AT PAGE 1 OF THE PAPER BOOK AND SUBMITTED THAT ASSESSEE HIMSELF HAS DISALLOWED 40% OF THE MOTOR CAR EXPENDITURE MOTOR CAR INSURANCE AND DEPRECIAT ION ON ACCOUNT OF PERSONAL USE OF MOTOR CAR. AS REGARDS THE TE LEPHONE EXPENSES THE ASSESSEE HAS DISALLOWED 25% OF THE SAME FOR PE RSONAL USE AND SIMILARLY THE ELECTRICITY EXPENSES ARE DISALLOWED UPTO 50% ON PERSONAL USE. LD. A.R FOR THE ASSESSEE HAS FURTHER CONTEN DED THAT THE ENTERTAINMENT EXPENSES ARE PERTAINING TO HOSPITALITY T O THE CLIENTS AND THEREFORE ONLY 25% OF THE SAME ARE CLAIMED BY THE ASSE SSEE AND REMAINING 75% HAS BEEN DISALLOWED BY THE ASSESSEE HIMSELF AS PERSONAL EXPENSES. THUS THE CLAIM OF THE ASSESSEE IS VERY RE ASONABLE IN VIEW OF THE NATURE OF THE WORK AND PROFESSION OF T HE ASSESSEE. HE HAS FURTHER SUBMITTED THAT THE CIT(A) HAS OBSERVED IN T HE IMPUGNED ORDER THAT THE ASSESSEE IS GETTING REIMBURSEMENT OF THE E XPENDITURE FROM THE FIRM WHICH IS AGAINST THE FACTUAL POSITION AN D WITHOUT ANY BASIS. SINCE NO SUCH REIMBURSEMENT HAS BEEN MADE BY THE FIRM ITA NO.4700 & 6518/M/08 A.Y:03-04 & 05-06 5 THEREFORE THE OBSERVATION OF THE CIT(A) IS BASED ON M ERE PRESUMPTION AND SURMISES. THE REMUNERATION INCOME RECEIVED FROM T HE FIRM IS ASSESSED AS INCOME FROM BUSINESS AND PROFESSION AND THEREFORE THE EXPENDITURE INCURRED FOR EARNING THE SAID INCOME IS ALL OWABLE UNDER THE PROVISIONS OF THE INCOME TAX ACT. LD. A.R HAS POINT ED OUT THAT IDENTICAL ISSUE HAS BEEN CONSIDERED AND DECIDED BY THE TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 1997-98 IN ITA NO.3860/M/2000 VIDE ORDER DATED 31/12/2004. THEREA FTER THIS ISSUE HAS BEEN AGAIN CONSIDERED AND DECIDED BY THIS TRIBUNAL I N ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 1998-99 2000-01 AND 20 03-04. IN ALL THESE EARLIER YEARS THE CLAIM OF THE ASSESSEE HAS BEEN ALLOWED THEREFORE THE ISSUE IS OTHERWISE COVERED IN FAVOUR OF T HE ASSESSEE AND AGAINST THE REVENUE. 4. ON THE OTHER HAND THE LD. D.R HAS SUBMITTED THAT THE ASSESSEE HAS FAILED TO ESTABLISH THE NEXUS OF THE EXPENDITURE WITH THE REMUNERATION INCOME AND THEREFORE THE AO HAS RIGHTLY DISALLOWED THE CLAIM OF THE ASSESSEE. HE HAS REFERRED TO PARA 5.4 OF THE IMPUGNED ORDER OF CIT(A) AND SUBMITTED THAT THE CIT(A) HAS GIV EN A FINDING THAT THE ASSESSEE HAS FAILED TO PROVE THE DIRECT NEXUS SO AS TO E STABLISH THAT THE EXPENSES WERE ATTRIBUTABLE TO THE EARNING OF THE REMUNERATION FROM THE FIRM. WHEN THERE IS NO CONNECTION BETWEEN RE CEIPTS AND ITA NO.4700 & 6518/M/08 A.Y:03-04 & 05-06 6 EXPENSES THIS CLAIM OF THE ASSESSEE NOT ALLOWABLE. HE HAS RE LIED UPON THE ORDER OF THE LOWER AUTHORITIES. 5. WE HAVE CONSIDERED THE RIVAL CONTENTIONS AS WELL AS RE LEVANT MATERIAL ON RECORD. AS EVIDENT FROM THE COMPUTATION O F INCOME AT PAGE 1 OF THE PAPER BOOK THE ASSESSEE CLAIMED 60% OF THE MOTOR CAR EXPENSES BY DISALLOWING 40% ON ACCOUNT OF PERSONAL USE. S IMILARLY 25% OF THE TELEPHONE EXPENSES 75% ENTERTAINMENT AND HOSPITALITY EXPENSES AND 50% OF ELECTRICITY AND RENT AND SECURITY EXP ENSES HAVE BEEN DISALLOWED BY THE ASSESSEE HIMSELF ON ACCOUNT OF PERSO NAL USE IN NATURE. WE FIND FORCE IN THE CONTENTION OF THE LD. A .R THAT THE REMUNERATION RECEIVED BY THE ASSESSEE IS CONNECTED WITH THE PROFESSIONAL WORK OF THE ASSESSEE BEING A WORKING PARTNER AND THE SHARE IN THE PROFIT OF THE FIRM IS RECEIVED BECAUSE OF ASSESSEE BEING A PARTNER IRRESPECTIVE OF A WORKING OR NON-WORKING PART NER. FROM THE ITEM OF EXPENDITURE IT IS CLEAR THAT THE PROFESSIONAL T AX CANNOT HAVE ANY ELEMENT OF PERSONAL EXPENSES. SIMILARLY WHEN IT HAS NOT BEEN DISPUTED THAT THE ASSESSEE IS NOT USING MOTOR CAR TELEPHON E PROFESSIONAL DRESS FOR ITS PROFESSIONAL WORK THEREFORE T HE ENTIRE EXPENDITURE CANNOT BE DISALLOWED. THERE MAY BE A POSSI BILITY OF PERSONAL USE OF MOTOR CAR AND TELEPHONE BUT AS REGARDS B OOKS AND UNIFORM IS CONCERNED THE SAID EXPENDITURE HAS A DIRECT AN D CLOSE NEXUS WITH THE PROFESSIONAL WORK OF THE ASSESSEE. THEREFORE PROFESSIONAL TAX ITA NO.4700 & 6518/M/08 A.Y:03-04 & 05-06 7 BOOKS AND UNIFORM EXPENDITURE IS ALLOWABLE EXPENDITUR E AGAINST THE REMUNERATION INCOME. AS REGARDS MOTOR CAR EXPENSES MOTO R CAR INSURANCE AND DEPRECIATION IS CONCERNED THE ASSESSEE HAS ALREA DY DISALLOWED 40% OF THE EXPENDITURE ON ACCOUNT OF PERSONA L USE WHEREAS THIS TRIBUNAL IN ASSESSEES OWN CASE FOR THE ASSESSMENT YEAR 1997-98 HAS ALLOWED THE CLAIM OF THE SAID EXPENDITURE. WE FURTHER NOTE THAT THIS TRIBUNAL FOR THE ASSESSMENT YEAR 1998-99 ALLOWED 85% OF THE SAID EXPENDITURE BY FOLLOWING THE ORDER OF TH IS TRIBUNAL IN ASSESSEES OWN CASE FOR A.Y 1997-98. THE RELEVANT PART OF THE TRIBUNALS ORDER IS REPRODUCED BELOW:- 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RECORDS. IN THE FACTS OF THE PRESENT CASE THE ASSESSEE IN ADDITION TO THE SHARE OF PROFIT RECEIV ED FROM THE PARTNERSHIP FIRM WAS IN RECEIPT OF REMUNERATION AND INTEREST ON ITS CONTRIBUTION TO THE CAPITAL OF THE FIRM. UNDER THE PROVISIONS OF SECTION 28(V) OF THE ACT T HE REMUNERATION AND INTEREST RECEIVED FROM THE PARTNER SHIP FIRM IS TAXABLE IN THE HANDS OF THE PARTNER THOUGH THE SHARE OF PROFIT ARISING IN THE PARTNERSHIP FIRM IS EXEMPT FROM TAX. DURING THE YEAR UNDER CONSIDERATION THE ASSESSEE HAD INCURRED AN EXPENDITURE OF RS.7 42 907 /- BUT AFTER EXCLUDING THE EXPENSES OF PERSONAL NATURE IT RESTRICTED ITS CLAIM FOR DEDUCTION TO RS.5 41 502/- . THE EXPENDITURE TOTALING TO RS.7 42 907/- IS BIFURCATED AS PER DETAILS MENTIONED AT PAGE 2 OF THE ASSESSMENT ORDER . THE SAID EXPENDITURE INCLUDED MOTOR CAR EXPENSES - RS.29 778/- MOTOR CAR INSURANCE-RS.39 668/- TRAVE LING EXPENSES-RS.6 467/- TELEPHONE-RS.4 967/- BOOKS- RS.12 200/- HOSPITALITY-RS.2 46 566/- PRINTING AN D STATIONERY-RS.1 384/- COAT-RS. 18 500/- MEMBERSHI P FEE-RS.22 665/- REPAIRS OF CHAMBER- RS.20 505/- ELECTRICITY-RS.48 435/- RENT HOSPITALITY-RS.2 46 5 66/- SECURITY-RS.96 000/- AND DEPRECIATION-RS. 1 25 772/ -. THE LEARNED CIT(A) ALLOWED THE CLAIM OF THE ASSESSE E TO THE EXTENT OF RS.4 60 277/- ONLY DISALLOWING 15% OF ITA NO.4700 & 6518/M/08 A.Y:03-04 & 05-06 8 RS.5 41 502/- IN ADDITION TO THE DISALLOWANCE MADE BY THE ASSESSEE ON ACCOUNT OF PERSONAL EXPENDITURE. THE ASSESSEE HAS FILED AN APPEAL AGAINST THE DISALLOWAN CE OF 15% OF THE EXPENSES AMOUNTING TO RS.81 225/- THOUG H NO PARTICULARS OF ANY APPEAL FILED BY THE REVENUE H AS BEEN BROUGHT TO OUR NOTICE. THE RESTRICTED ISSUE BE FORE US IS AGAINST THE DISALLOWANCE OF 15% OF THE EXPENDITU RE AMOUNTING TO RS.81 225/-. KEEPING IN MIND THE BREAK UP OF THE EXPENDITURE AND ALSO THE ORDER OF THE CO-ORD INATE BENCH OF THE TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 1997-98 AND ALSO THE FACT THAT ASSE SSEE HAS ALREADY DISALLOWED PART OF THE EXPENDITURE FOR ITS PERSONAL USE WE FIND NO MERIT IN FURTHER DISALLOWA NCE OF 15% OF THE EXPENDITURE MADE BY THE LEARNED CIT(A). WE ACCORDINGLY DIRECT THE ASSESSING OFFICER TO ALLOW T HE CLAIM OF THE ASSESSEE TO THE EXTENT OF RS.5 41 502/- IN V IEW OF THE FACT THAT THE TOTAL EXPENDITURE INCURRED BY THE ASSESSEE WAS RS.7 42 907/- AND THE ASSESSEE ON ITS OWN MOTION HAD RESTRICTED THE CLAIM OF EXPENDITURE TO RS.5 41 502/-. THUS THE GROUND OF APPEAL RAISED BY THE ASSESSEE IS ALLOWED. 5.1 THEREFORE THE EXPENSES OF MOTOR CAR MOTOR CAR INS URANCE AND MOTOR CAR DEPRECIATION AND REPAIR ARE COVERED BY THE O RDERS OF THIS TRIBUNAL IN ASSESSEES OWN CASE. AS REGARDS THE HOSPITALITY EXPENSES ARE CONCERNED FROM THE DETAILS WE FIND THAT THESE EXPEN SES ARE IN RELATION TO VARIOUS CLUBS. THEREFORE IN OUR VIEW TH E CLUB EXPENDITURE INCURRED BY THE ASSESSEE CANNOT BE SAID TO HAVE BEEN FOR ENTERTAINING THE CLIENTS AND FOR PROFESSIONAL PURPOSES. ACCORDINGLY T HE HOSPITALITY EXPENSES INCURRED IN RELATION TO CLUB ARE NOT ALLOWABLE HOWEVER WE MAKE IT CLEAR IF ANY EXPENDITURE HAS BEEN INCURRED BY THE ASSESSEE IN ITS OFFICE/CHAMBER FOR TEA COFFEE SNACKS ETC. THAT IS ALL OWABLE EXPENDITURE. SINCE THE DETAIL OF SUCH EXPENDITURE HA S NOT BEEN ITA NO.4700 & 6518/M/08 A.Y:03-04 & 05-06 9 FURNISHED BEFORE US THEREFORE IT IS NOT POSSIBLE TO G IVE A FINDING ON THE QUANTUM OF THE EXPENDITURE IN THIS RESPECT. AS RE GARDS THE ELECTRICITY AND RENT AND SECURITY EXPENDITURE ARE CONCERN ED THE ASSESSEE HAS CLAIMED 50% OF ELECTRICITY AND RENT AND SECURITY CHARGES AS PROFESSIONAL EXPENDITURE ON THE GROUND THAT THE ASSESS EE IS RUNNING ITS OFFICE FROM THE RESIDENTIAL PREMISES. IT IS TO BE NO TED THAT CLAIMING 50% OF ELECTRICITY EXPENDITURE AS PROFESSIONAL EXPENSES IN OUR VIEW IS ON HIGHER SIDE AND THEREFORE WE ALLOW 25% OF THE EL ECTRICITY CHARGES INSTEAD OF 50% CLAIMED BY THE ASSESSEE ON THIS ACCOUNT. SI NCE THERE IS NO EXTRA PAYMENT ON ACCOUNT OF RENT AND SECURITY IS PA YABLE BECAUSE OF THE PREMISES USED FOR OFFICE/CHAMBER BY THE ASSE SSEE. THE ASSESSEE IS USING A PART OF HIS RESIDENTIAL PREMISES AND NO E XTRA EXPENDITURE ON ACCOUNT OF RENT AND SOCIETY CHARGES ARE P AYABLE OR PAID BY THE ASSESSEE BECAUSE OF THE OFFICE IN THE RESIDENTIAL PR EMISES THEN NO SUCH CLAIM OF EXPENDITURE IS ALLOWABLE. AS REGARDS TH E APPORTIONMENT OF THE EXPENDITURE IN THE RATIO OF RE MUNERATION INCOME AND SHARES IN THE PROFITS OF THE FIRM FOR THE ASSESSMENT Y EAR 2005-06 IS CONCERNED WHEN THESE EXPENDITURES ARE CONNECTED WITH TH E PROFESSIONAL WORK OF THE ASSESSEE AND NOTHING TO DO WITH THE STATUS OF PARTNER IN THE PARTNERSHIP FIRM THEN WE DO NOT APPRO VE THE APPROACH AND VIEW OF THE LOWER AUTHORITIES BY DIVIDING THE EX PENDITURE IN ITA NO.4700 & 6518/M/08 A.Y:03-04 & 05-06 10 PROPORTION TO THE SHARE IN THE PROFITS OF THE FIRM AN D REMUNERATION. THIS GROUND IS PARTLY ALLOWED. 6. GROUND NO.2 FOR THE ASSESSMENT YEAR 2003-04 IS REGARD ING INITIATION OF PENALTY UNDER SECTION 271B FOR NON FILI NG OF AUDIT REPORT. 7. WE HAVE HEARD THE LD. AUTHORISED REPRESENTATIVE AN D THE LD. DEPARTMENTAL REPRESENTATIVE AND CONSIDERED THE RELEVAN T RECORDS. THIS ISSUE IS PREMATURE AND CAN BE RAISED ONLY AGAINST TH E LEVY OF PENALTY IF ANY UNDER SECTION 271B THEREFORE THIS GRO UND IS NOT MAINTAINABLE. THE LD. AR HAS CONTENDED THAT THE CIT( A) HAS MADE CERTAIN OBSERVATIONS REGARDING NON FILING OF THE AUDIT REPORT AND THEREFORE THE SAID OBSERVATION OF THE CIT(A) WILL HA VE THE BEARING ON THE LEVY OF PENALTY IF ANY UNDER SECTION 271B. IN TH IS RESPECT WE MAY MENTION THAT THE CIT(A) HAS NOT GIVEN ANY FINDING AN D DECIDED THE ISSUE IN PARA-8 AS UNDER :- 8. IN THE GROUND NO.4 IT IS STATED THAT ON THE FA CTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW TH E AO ERRED IN INITIATING PENALTY UNDER SECTION 271B OF T HE INCOME TAX ACT. THE APPELLANT PRAYS THAT THE AO MA Y PLEASE BE DIRECTED TO DROP THE PENALTY PROCEEDINGS THE APPELLANT IS NOT REQUIRED TO ENCLOSE AUDIT REPORT A LONG WITH THE RETURN OF INCOME. HOWEVER THE GROUND BEIN G PREMATURE WHICH CANNOT BE CONSIDERED IN THE QUANTUM APPEAL EVEN OTHERWISE ALSO THE SAME FAILS. ITA NO.4700 & 6518/M/08 A.Y:03-04 & 05-06 11 7.1 THEREFORE WE DO NOT FIND ANY REASON TO INTERFER E IN THE ORDER OF CI(A) QUA THIS ISSUE. AS REGARDS ANY OBSERVATION MADE B Y THE CIT(A) IN THE IMPUGNED ORDER THE SAME WILL HAVE NO BEARING ON THE PENALTY PROCEEDINGS WHICH ARE SEPARATE AND INDEPENDENT WHEN NO T FINDING HAS BEEN GIVEN IN THE IMPUGNED ORDER. 8. FOR THE ASSESSMENT YEAR 2005-06 IN ITA NO.6518/M/2008 THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS :- 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE AND IN LAW THE LD. CIT(A) ERRED IN CONFIRMING THE ACTION OF A.O. IN NOT ALLOWING THE EXPENDITURE INCURRED BY TH E APPELLANT ON MOTOR CAR TELEPHE BOOKS RENT BLACK COAT AND PANT AND DEPRECIATION OF RS.2 87 409/- ON PROPORTIONATE BASIS. THE APPELLANT PRAYS THAT THE DISALLOWANCE OF RS.2 87 409/- MAY KINDLY BE DELETED . THE APPELLANT PRAYS THAT THE SAID EXPENSES CLAIMED OF RS.2 87 409/- MAY PLEASE BE ALLOWED. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE LD. CIT(A) ERRED IN CONFIRMING THE ACTION OF A.O. IN MAKING AN ADDITION OF RS.8 825/- ON ACCOUNT OF DEMAT CHARGES ON THE GROUND THAT EXPENDITURE SO INCURRED ARE NOT RELATABLE TO THE EARNING OF INCOME FROM OTHER SOURCES. THE APPELLANT PRAYS THAT THE DISALL OWANCE OF RS.8 825/- MAY KINDLY BE DELETED. 9. GROUND NO.1 IS COMMON IN BOTH THE APPEALS AND AS WE HAVE ALREADY ADJUDICATED THIS ISSUE IN THE FOREGOING PARA OF THIS ORDER THEREFORE THIS GROUND IS ACCORDINGLY ALLOWED IN PART. 10. GROUND NO.2 IS REGARDING ADDITION ON ACCOUNT OF DE MAT CHARGES. AT THE TIME OF ARGUMENT THE LD. AR SUBMITTED THAT TH E ASSESSEE DOES ITA NO.4700 & 6518/M/08 A.Y:03-04 & 05-06 12 NOT PRESS THIS GROUND AND THE SAME MAY BE DISMISSED AS NOT PRESSED. THE LD. DEPARTMENTAL REPRESENTATIVE HAS NO OBJECTION I F GROUND NO.2 FOR THE ASSESSMENT YEAR 2005-06 IS DISMISSED AS NOT PRESSED. ACCORDINGLY WE DISMISS THIS GROUND BEING NOT PRESSED. 11. IN THE RESULT BOTH THE APPEALS ARE PARTLY ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON 30 TH NOV 2011 SD/ SD/- (R.K. PANDA) (VIJAY PAL RAO) ACCOUNTANT MEMBER J UDICIAL MEMBER MUMBAI DATED: 30 TH NOV 2011. JV. COPY TO: THE APPELLANT THE RESPONDENT THE CIT CONCERNED MUMBAI THE CIT(A) CONCERNED MUMBAI THE DR BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR ITAT MUMBAI.